A new report by Signa Sports United (SSU) and the Boston Consulting Group puts the size of the global sports market in 2020 at $1.1 trillion. It also predicts that global sports participation will grow to 3.5 billion people by 2025, and that online sale of sporting goods will continue to increase overproportionately. The study, which is titled Sports in the Digital Age — How Online Vertical Specialists and Brand Direct-to-Consumer Outpace Generalist Sports Retail, also stresses the direct correlation between increased sports participation and e-commerce penetration, as well as the accompanying increase in the adoption of digital innovations like sports wearables and other fitness trackers.
Within the global sports market, evaluated at $1.1 trillion in 2020 (at retail selling prices excluding VAT), Physical Activities represent the largest part, at $365 billion. This figure includes elements such as club memberships, courses (studio and online) and alike. Apparel & Gear takes the second spot at $340 million, followed by Broadcasting Rights ($170 billion), Equipment ($110 billion), Ticket sales (€95 billion), and finally Technology ($26 billion).
Western markets (Western Europe and the U.S.) lead the way, capturing 55 percent of global sports consumer spending. Of the remaining 45 percent, the Asia-Pacific accounts for 27 percent, while Eastern Europe accounts for 2 percent and the Rest of the World (“small geographies such as South America and Africa,” as defined in the report) accounts for 15 percent.
Playing in favor of SSU, an international pure online retailer for bicycles and other sports products, cycling and e-commerce have been the two big trends during the recent Covid pandemic. Besides the health concerns related to the crisis, cycling is helped by its image as a climate-friendly urban transportation means and outdoor leisure activity. According to the report, 38 percent of Europeans are now riding a bike at least once a week for commuting. Meanwhile, week-end leisure utilization of bicycles increased by an estimated 38 percent in the summer and autumn of 2020 as compared to the same period of the previous year.
Western Europe is cementing its position as the largest global cycling market, with 40 percent of sales and a total expected growth of 49 percent by 2025. The U.S. is catching up, though. Even if daily bike commuting is still below 5 percent, week-end usage for recreational purposes in the U.S. grew by 29 percent in 2020 as compared to 2019. Also, sales of bicycles jumped by 70 percent in the U.S. in the first half of 2020 versus the first half of 2019.
Sports e-commerce has been massively boosted by the pandemic and this trend is expected to continue in the years to come. While every fourth dollar was already spent online in 2020, sports e-commerce is projected to reach a penetration of 30 percent by 2025, after a 13 percent compound annual average rate (CAGR) of increase until then.
The traditional physical sporting goods stores are challenged from many sides, the report notes: brands are pushing their direct-to-consumer (DTC) efforts, large online generalist platforms like Amazon or Zalando keep expanding, and online vertical specialists (like Tennis-Point and other web stores operated by SSU) are growing rapidly. Brick-and-mortar sports retailers need to have a compelling multi-/omni-channel proposition to win, the report’s analysts say. Equipment-heavy sports categories like cycling, tennis and outdoor will likely partner with full-service e-commerce platforms to support DTC growth. The analysts have concluded that there will be two winning strategies in sports retail besides brands’ DTC push: be the largest or be an online category champion.
In terms of retail players, the sports market is still relatively fragmented, according to the report. The three largest global sports retailers – Decathlon, Dick’s Sporting Goods and JD Sports Fashion – together account for only 7 percent of the global sports retail market, says the report (Note: Foot Locker was a little larger than JD in 2019, but JD overtook Foot Locker in 2020, thanks to acquisitions). This state of affairs leaves room for ongoing consolidation in the next few years including M&A moves, especially to drive scale and platform synergies, the study suggests.
Regarding sports participation, the report found that this is already the second most common global leisure activity after traveling, with 35 percent of the world’s population participating in sports at least once a month. And global sports participation is expected to increase by one billion people and reach 3.5 billion by 2025. Covid-19 has further stimulated sports participation and the related spending, according to researchers. In Germany, for example, the number of sports enthusiasts, that is those who exercise two to three times per week, increased by 6 percent as compared to 2019, and reached 54 percent. During the pandemic, 47 percent of people have focused more on health and wellness and 55 percent expect to maintain this habit afterwards.
More broadly, the increase in sports participation is being driven by a series of megatrends. The authors of the study have highlighted five of them. Firstly, an increasing health and fitness awareness, which is concurrently boosting the demand for sports apparel, equipment, nutrition and services.
Secondly, a “social” ideal of a healthy lifestyle, fueled by social media. The weight of social media is further exemplified by the fact that ten out of 15 top Instagram influencers serve as ambassadors of leading sports brands. A third element lies in the ongoing increase in women’s participation in sports, which is especially visible in the running and fitness segments.
Fourthly, incentives by governments, insurance companies and employers to promote an active and healthy lifestyle have contributed to boost sports participation. In Germany, for example, 10.9 million people could benefit from health activities subsidized by insurance in 2019 (+37% from 2017). In the U.S., 88 percent of employers are offering general wellness programs such as subsidized gym memberships, sport courses, etc.
Finally, a fifth megatrend that is boosting sports participation comes from global sports mega-events like the Olympic Games and the FIFA World Cup, as well as the successful global expansion of major leagues like the NBA, the NFL and others.
Sports-minded people increasingly use digital technologies such as wearables and apps. More than 830 million people globally used wearables or fitness apps in 2020. Digitization of sports did, indeed, climb to new heights during Covid-19, as people sought new workout experiences from home and personalized, alternative fitness solutions. More than half (56%) of all sports people expect to adopt wearables in the future, mainly to measure their performance, learn more about a healthy lifestyle or take part in online training sessions.
For the purpose of this study, Signa Sports United and the Boston Consulting Group surveyed 19,000 consumers across four countries – U.S., U.K., France and Germany – from January to March 2021, paired with deep market research and expert interviews.
Photo: Ilya Pavolv, Unsplash